Canadian organizations are projecting an average salary increase of 3.0 per cent for 2026, excluding wage freezes, according to a survey by Normandin Beaudry.
The forecast represents a 0.1 per cent decrease from summer 2025 projections and continues a slow decline in salary increase budgets observed since 2023.
Nearly 400 Canadian organizations participated in the Salary Increase Pulse Survey during the last quarter of 2025.
Budget adjustments and additional funding
Nearly two-thirds of organizations are not planning changes to their initial salary increase budget projections from last summer, according to the survey.
Among the 26 per cent of organizations planning adjustments, more than half will reduce their initial budget while the remainder intend to increase it.
Forty-two per cent of respondents have allocated an average of 0.8 per cent of payroll for additional budget funds beyond the traditional salary increase budget.
“As economic and trade uncertainty continues to shape Canada’s market, organizations are taking a cautious, gradual approach to salary increase budgets,” said Darcy Clark, senior principal of compensation at Normandin Beaudry. “At the same time, heightened expectations for transparency are pushing organizations to refine and clearly articulate the holistic employee experience and total rewards they offer.”
Total rewards strategy priorities
Organizations are focusing on internal total rewards strategies in 2026, with 58 per cent targeting employee engagement, 47 per cent addressing compliance with legislative requirements including pay equity and transparency, and 42 per cent improving employee communication.
Workforce and incentive outlook
Almost half of organizations expect their annual incentive plan to pay at or above target in 2026, while 35 per cent plan to increase their workforce during the year.
The consulting firm’s full report and interactive tool, with details by province, industry sector, size and type of organization, are available on the Normandin Beaudry website.
Normandin Beaudry is a total rewards consulting firm with over 350 professionals serving clients across Canada from offices in Montreal, Toronto and Quebec City.
